The British construction and public services giant Carillion has gone into liquidation after lenders refused to provide any further financial support to prop up the struggling firm.

The stricken company said it had "no choice but to take steps to enter into compulsory liquidation with immediate effect" after last-ditch rescue talks failed, throwing hundreds of major projects and tens of thousands of jobs into doubt.

Carillion was a key contractor for the HS2 railway project and has worked with Leeds City Council on a number of infrastructure schemes including the Woodhouse Tunnel improvement works.

A Carillion sign at a construction site in central London, as the Government said all Carillion staff should still come to work and "those already receiving their pensions will continue to receive payment", following the construction giant's collapse (Image: Yui Mok/PA Wire)

Just last week it was announced that the firm had been awarded a £75m contract for work on East Leeds Orbital Route.

The announcement had been delayed from October because of Carillion's financial difficulties.

Leeds City Council chief executive Tom Riordan said the council was assessing the impact of Carillion's situation on Leeds.

He said: "We know Carillion’s situation is not just affecting Leeds, and we are liaising with central government to see how we can help ensure services and contracts are still delivered successfully. We have been monitoring Carillion’s situation and planning accordingly and are now implementing those plans.

"We also know this will affect many people who work for Carillion directly and indirectly, and we will want to see how Government can make sure any arrangements take account of the impact on them of what has happened.

"While Carillion were the preferred bidder for the ELOR (East Leeds Orbital Road) work, a final contract had not been signed off. The contingency plans in place reflect the fact that we have been monitoring Carillion’s situation and planning accordingly."

The firm also recently won a £7m contract to build a cycle route in Leeds.

What should I do if I work for Carillion?

Carillion employed 20,000 people across the UK, many of whom under government contracts.

The Government's insolvency service has said that in order to ensure continuity of public services, the companies will employ workers on the same terms and conditions as before.

In an announcement the Government said:

employees should continue to turn up for work and will be paid as normal

any employee worried about their pension situation can ring The Pension Advisory Service (TPAS) on 0300 123 1047 for free and impartial guidance

The Pension Advisory Service (TPAS) has also set up a special helpline number for members of these pension schemes: 020 7630 2715. Those already receiving their pensions will continue to receive payment

a dedicated website has been set up to provide information for anyone affected - see www.pwc.co.uk/carillion and a dedicated helpline – 0800 063 9282

JobCentre Plus, through its Rapid Response Service, is on standby ready to support any employee affected by this announcement

Ministers refused to bail out the private firm with government cash.

The construction giant asked the Government to provide funds of £20 million to help it secure more money from the banks and avoid going into administration, it is claimed.

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Talks were held throughout the weekend between Government ministers and company officials in a bid to keep Carillion in business, but they broke up on Sunday evening without a deal.

Defending the decision not to bail out the firm, Cabinet Office Minister David Lidington told BBC Radio 4's Today programme: "We did decide that taxpayers can't be expected to bail out a private sector company, particularly when their troubles arose for the most part from a side of their business which is nothing to do with UK government contracts."

The Federation of Master Builders (FMB) said Carillion going bust will put smaller firms in its supply chain at risk.

FMB chief executive Brian Berry said: Carillion’s liquidation is terrible news for all those who work for the company and it will have serious knock-on effects for the many smaller firms in its supply chain, some of which will be in serious financial danger as a result of Carillion’s demise."

"Carillion’s liquidation raises serious questions for the Government, not least about its over-reliance on major contractors. The Government needs to open up public sector construction contracts to small and micro firms by breaking larger contracts down into smaller lots. That way, it can spread its risk while also reaping the benefits that come from procuring a greater proportion of its work from a broad range of small companies. Construction SMEs train two-thirds of all apprentices and are a sure-fire way of spreading economic growth more evenly throughout the UK."